H+H International A/S - Further to the completion of H+H’s acquisition of Grupa Prefabet S.A. in Poland on 5 February 2015, an overall Polish restructuring plan is announced

Company Announcement No. 313, 2015

Copenhagen, Denmark, 2015-02-06 14:52 CET (GLOBE NEWSWIRE) --  

H+H International A/S
Dampfærgevej 3, 3rd Floor
2100 Copenhagen Ø
Denmark
Telephone: +45 35 27 02 00
www.HplusH.com
Company reg. no. 49 61 98 12

Further to the completion of H+H’s acquisition of Grupa Prefabet S.A. in Poland on 5 February 2015, an overall Polish restructuring plan is announced

The new structure for H+H’s activities in Poland will lead to closure of three factories in addition to the already mothballed H+H factory in Skawina, which will be closed permanently, leaving six factories in operation. Once restructured, the Polish aircrete activities are expected to generate increased earnings, in line with the expectations announced cf. Company Announcement No. 301 of 9 October 2014.

The Polish aircrete market is the biggest in Europe but activity levels have dropped significantly in recent years due to the economic slowdown, leading to extensive overcapacity, very low selling prices and, in consequence, a lack of profitability among producers.

H+H International A/S has previously highlighted a need for significant restructuring to normalise the market and create a natural balance between market demand and available capacity. H+H is now taking the lead in this by actively closing three more factories in addition to the already mothballed H+H factory in Skawina, which will be closed permanently.

In the future, H+H’s activities in Poland will comprise a total of six factories: the two factories in Reda and Zelislawice acquired from Grupa Prefabet and the four H+H Polska factories in Warsaw, Pulawy, Lidzbark and Gorzkowice.

An unavoidable and regrettable consequence of the necessary restructuring is redundancies involving around 200 employees.

Michael T. Andersen, CEO of H+H International A/S, says:

“A significant restructuring process, with factories being closed and around 200 employees being made redundant, is necessary to restore profitability. After several years of loss making in Poland, we expect H+H to be able to return to satisfactory earnings levels.

Being profitable is the best long-term guarantee of a stable workplace for our employees.”

Significant synergies are expected over the next two years:

• Production capacity utilisation at H+H’s factories will be improved as the higher production volumes will be produced by fewer factories, although H+H does not expect to reach the same production volume as the current combined nine factories would have achieved
• Cost synergies can be obtained on the production
• There will be fixed cost savings in consequence of the new organisation
• Location of the factories will improve H+H’s geographical market position from Reda in north Poland via Warsaw in the central region to Zelislawice in the south

EBITDA, excluding special items, is expected to increase by approximately DKK 10 million in 2015, partly due to planned synergies. Integration costs, recognised as special items, will be approximately DKK 20 million. Over the next four years, the ambition is to increase the EBIT margin for the combined Polish activities to a level in line with H+H’s long-term EBIT margin target of over 6%, assuming that conditions in the Polish market improve and the restructuring plan progresses as scheduled.

The combined net working capital of H+H Polska and Grupa Prefabet is expected to be reduced by approximately DKK 20 million during 2015.

To achieve the optimal production set-up for the six remaining factories in Poland, H+H expects to make additional investments totalling approximately DKK 20 million during 2015 and 2016.

Finally, over the next two to three years H+H expects to be able to sell off assets (land, buildings, equipment and scrapped steel) at a total sales price exceeding DKK 70 million.

Kent Arentoft
Chairman of the Board of Directors

Michael T Andersen
CEO

For additional information please contact:
Michael T Andersen, CEO, or Bjarne Pedersen, Vice President, Business Development & IR,
on telephone +45 35 27 02 00.

This is a translation of the company's announcement in Danish. In case of inconsistency between the Danish text and this English translation, the Danish text will take precedence.